HARARE (NewsDay Live) Feb 14 - The International Monetary Fund (IMF) says Zimbabwe’s debt and external arrears remain unsustainably high, forcing the country to rely on its own resources.
This comes as Zimbabwe has been struggling to access international funding after it's debts has accumulated to US$ 21 billion overtime.
The decision was made after it concluded a staff-monitored program (SMP) discussion mission to Zimbabwe, aimed at advancing discussions on the SMP, which was requested by the Zimbabwean authorities in 2023.
In its conclusions, IMF stated that Zimbabwe's current debt situation, deemed unsustainable, combined with outstanding external arrears, makes it ineligible for IMF financial assistance at present.
The mission took place from January 30 to February 13, 2025 led by Wojciech Maliszewski who is the Deputy Unit Chief in the African Department at the International Monetary Fund (IMF).
"The IMF is currently precluded from providing financial support to Zimbabwe due to its unsustainable debt situation—based on the IMF’s Debt Sustainability Analysis (DSA)—and official external arrears," reads a statement released by the IMF yesterday.
According to Maliszewski: "Zimbabwe's economic activity has started recovering after the El Niño-induced drought. Growth slowed from 5,3 percent to an estimated 2 percent in 2024, as the drought lowered agricultural output by 15 percent."
However, he noted that strong remittances continued to support activity in domestic trade, services, and construction, improving the current account surplus to an estimated US$500 million (1,4 percent of GDP) in 2024.
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The IMF mission found that fiscal pressures intensified in 2024, mainly due to the transfer of the Reserve Bank of Zimbabwe's quasi-fiscal operations to the Treasury.
Despite strong revenue collection, the 2024 budget deficit was estimated at 1 percent of GDP, leading to an accumulation of domestic expenditure arrears and emergency spending cuts.
“Key areas of discussion during the mission included: Fiscal Consolidation: Adjusting the fiscal position to avoid monetary financing and new arrears, and building foundations for a durable fiscal consolidation, addressing fiscal risks residing off-budget, including those related to the Mutapa Investment Fund, enhancing the effectiveness of the monetary policy framework for the Zimbabwean dollar (ZiG) and Implementing reforms to strengthen economic governance,” reads the statement.
Looking ahead, the IMF projects growth in 2025 to increase to 6 percent, driven by the recovery in agriculture output due to better climate conditions and improved terms-of-trade.
The IMF noted that it will continue to provide policy advice and technical assistance to Zimbabwe.
“The SMP aims to support Zimbabwe’s efforts to stabilise the economy and re-engage with the international community on arrears clearance and debt resolution. The program’s main objective is to durably anchor macroeconomic stability, building on policy recommendations from the 2024 Article IV consultation,” it read.
